RealShare View from the Top Panel
LOS ANGELES—Top executives from some of the most active companies in multifamily recently discussed market conditions as well as strategies that work, and how they are propelling their business forward at RealShare Apartments. During the panel last week, titled, “Industry Leaders: A View from the Top” moderator Stan Jones, executive director of Institutional Property Advisors, asked panelists about their business and about how they feel in today's environment.
For Jeff Allen, founder and CEO of Raintree Partners, who said that his remarks are limited to California, things are going well. “We started cranking up our development organization in 2012 after shutting it down in 2008-2011 and started buying land at prices that, today, would seem extraordinary,” he said.
Allen pointed out that there are pockets that are challenged, such as pockets of San Francisco and the Bay Area, but over the long term, he said, “we are feeling pretty good about development today.”
But that is just one of Raintree's strategies, but not the only one. “We simply can't overload our boat with apartments that are expected to achieve crazy high rents.”
When the conversation switched to construction costs, James Flynn, president of Hunt Mortgage Group, said that he expects it will impact deliveries in a sense that costs will go up. “Borrowing costs will go up,” he said. “What is happening for us is between the rise in cost and the increase in regulation at the banks, I think that is an opportunity for private buyers. Despite the increase in building, I think we are in a healthy environment overall.”
As it pertains to funds and investors, Jerry Fink, managing partner of the Bascom Group LLC, is seeing a huge increase of demand from the private investor and not just the small private investor. “It is the private equity funds,” he said. “A lot of these groups are having their researchers say that workforce housing is the place to be. And you are seeing more and more groups buy class B across the country. Bonds are pretty much nothing, so multifamily real estate is one more track where people can put their money. We are seeing a lot more private capital flowing in the sector.”
For panelist Angela Kleiman, EVP and CFO of Essex, it is important to look at the supply and job relationship very closely. When talking about activity, Kleiman doesn't expect her firm's activity to come to a halt in the near future even if there is a slowdown. “Even though Wall Street might not be available to us, we are finding private capital very interested in co-investing with us and their interest has continued to exceed our capital needs.” When asked about transit oriented developments, Allen says that his firm is trying to focus on that, pointing out that a lot of the projects in Southern California, for example, are near freeways or metro link line. “We love to be able to develop along transit notes. But the acquisition strategy is far from transit notes where housing is a bit more affordable.”
On the lending side, Flynn said that the GSEs will continue to be the big players, noting that it doesn't look like the election will significantly affect that. “The question is: are banks and insurance companies going to continue to build their balance sheets as they have been?”
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
